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TESS VIGELAND:A lot of us are trying to figure out how to live differently these days. For some the change has been forced by a layoff or losses in a retirement fund. For others it's a matter of finally starting to live within your means. But today we hear about a family that's voluntarily stepping off a financial cliff.
Here's Cathy Duchamp.
Cathy Duchamp: Meet the Pham family of south Baltimore. Luu and Christina, both 38, and their baby girl.
Christina Pham Linhoff: This is Cat Tien, seven and a half months old.
Luu Pham: She's the main attraction.
Christina: Yup, the new center of the universe.
That new center of the universe is pulling the Phams in a direction most parents today don't think they can go. Luu Pham is about to put his biostatistics career on hold to take care of Cat Tien. Christina will continue to work full-time, as a director in the School of Public Health at Johns Hopkins University. The Phams' income will be cut nearly in half to just under $80,000 a year.
Christina: I feel like, Hooray! We're doing what we want to do, we're not making excuses for why we can't do what we want to do.
What the Phams want to do is spend more time with their daughter and less time chasing a second paycheck. They didn't think it would be possible at first. Like most professional working couples, the Phams were shopping for day care. But then they ran the numbers and realized it wouldn't cost that much more to give up one job and stay at home with the baby. But it would take something else to put their plan into action: Practice.
Christina: We've been living as if we're on one income since early February.
The Phams have been budgeting and making adjustments. They changed health care plans to get more affordable coverage. They knocked 10 percent off their monthly mortgage payments by refinancing, a move they made while they still had two incomes and looked good to bankers. Not only do they have a Plan B, if the stay-at-home dad thing bombs, they have a Plan C. It includes going back to work.
Luu: By nature, I look at risk as something that you can manage, not as something unknown. I try to bring measurement into the whole process.
Now that this point, Luu and Christina are not like the rest of us. For one thing, they chose to give up the paycheck, rather than have a job disappear. Even so, I realized there's a lot we can learn from them. After talking to University of Wisconsin professor J. Michael Collins. He studies how people make financial decisions.
J. Michael Collins: People tend to get pretty anxious, when they think about making financial decisions. And it's not unusual for people to get so anxious that they almost become stuck.
Collins says denial tends to kick in at the point where we really need to be paying attention. He saw that first hand in a focus group of people who had defaulted on their mortgages.
Collins: Many of them talked about putting all their mail in their couch or sticking all their mail into the kitchen drawer without opening it, because they were so nervous about what might be in that letter that they just stopped paying attention to all mail. Which of course did nothing to help their situation, in fact it made their situation worse.
The Phams may never come to that. But like lots of people in today's economy they battle credit card debt for years.
Christina: I had credit card debt and it wasn't a pretty sight.
Luu: Yeah, paying for the dinners that I had in college, ten years later or whatever. That's kind of the way it was.
Christina: I mean, you really have to make a choice to take responsibility for it and then actually do it. And there's no other way.
The Phams chose to take responsibility when they decided to buy a house. They got a "Finance for Couples" workbook and actually did the exercises, learning how to take the emotion out of money decisions.
Christina: You know that heightened sense of anxiety and fear. We just dropped those levels down and it's something we can talk about rationally.
One thing they still do four years and one child later, a weekly budget meeting.
Christina: Instead of when someone's busy washing dishes and the other has a screaming child in their arms, saying, "What happened to that payment for the insurance company?" Instead of asking at that time, we know to come to our meeting, bring whatever issues you have, so we don't ambush each other.
Baby Cat Tien will probably be at those meetings as soon as she learns to walk. Parents Luu and Christina the frugal living lessons stick, at least for a while.
Christina: Maybe she'll rebel by being a really big shopper.
Luu: You never know.
Luu Pham starts his new life as a stay-at-home dad July 1.
In Baltimore, I'm Cathy DuChamp for Marketplace Money.